Mortgage lending clampdown comes into force

A clampdown on mortgage lending comes into force which will see lenders delve more deeply into people's personal lives, from their plans for parenthood to how they will spend their old age.

Mortgage broker: 'Important to prepare a lot earlier'

The Mortgage Market Review (MMR) rules aim to ensure there is no return to any irresponsible lending practices of the past.

But some concerns have been raised that it could slow down the housing market, which has been springing back into life over the last year, as the industry adjusts.

Each lender will have their own interpretation of the new rules, but in general people are likely to be asked for more detail about regular outgoings such as childcare, food, household bills, loans, credit cards, toiletries, hobbies and leisure activities, to see if they can afford a home loan.

It's important for people to prepare a lot earlier, potentially six months before you apply. Start looking through your documentation and go through a budget.

– Andrew Montlake, director at broker Coreco

Lenders will also look for any impact that future life changes could have, such as when they plan to retire and how they plan to spend their old age.

There have also been reports of some people being asked if they are planning to start a family as lenders gear up to comply with the rule changes.

Mortgage lending clampdown comes into force

A clampdown on mortgage lending has come into force which will see lenders delve more deeply into people's personal lives, from their plans for parenthood to how they will spend their old age.

Lenders want to know more about spending habits. Credit: Dominic Lipinski/PA Wire/Press Association Images

The industry-wide changes affect home buyers and people looking to re-mortgage and they will mean that lenders have to take a much stronger interest in people's spending habits and how their life plans could affect their ability to meet their repayments.

Mortgage applicants will need to sit through longer interviews, provide more paperwork to back up what they are saying and could find themselves taken aback by the probing nature of some of the questions they will be asked.

Read: How will the new mortgage changes affect you?

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